NAIROBI: Kenya Revenue Authority (KRA) will settle all Value Added Tax refund claims that it owes business entities before the end of the current financial year.
KRA commissioner general John Njiraini said the all outstanding amounts will be paid in time as was promised by Treasury Cabinet Secretary Henry Rotich in the budget speech. About Sh1.2 billion is paid to the business entities every month to settle VAT refund claims.
Njiraini said since the withholding VAT regime was discontinued in 2010, the authority does not have any refund claim backlog. “The regime introduced in 2014 captures data on persons trading with government. The i-Tax system generates the withholding tax almost immediately because it is automated.
With the new system, only partial withholding of six per cent is taken to avoid refund claims,” Njiraini said during the launch tax amnesty on rental income in Nairobi yesterday.
According to the new regime, a business must lodge a VAT refund claim within 12 months contrary to the former system which could run even after three years.
“These claims will require to be filed within 12 months from the date repayable credits arise,” said Njiraini. VAT refunds apply where a business makes zero-rated supplies, mainly by way of exports. He said the authority is in discussion with county governments to assist them collect levies such as land rates.
Commissioner for domestic taxes Alice Owuor said since KRA rolled out tax amnesty on rental income, it has netted Sh8.5 billion. She said from now up to the next financial year, the authority expects to collect about Sh3 billion from rental income alone. “The real estate sector has received tremendous growth for the last one decade but KRA has not received the same growth in term of revenue collection,” she said.
